Economy
PM’s State Visit: Dhaka, Delhi eye signing dozen of instruments; new initiatives to strengthen cooperation
Bangladesh and India are likely to sign over a dozen of bilateral instruments with some new initiatives by identifying new areas of cooperation during Prime Minister Sheikh Hasina’s state visit to India on 21-22 June, officials have said.
The two-day state visit is taking place at the invitation of Indian Prime Minister Narendra Modi that might carry some directives giving a picture of greater cooperation between the two countries in the future, they said.
This will be the first full-fledged bilateral visit by any head of government to India after the Bharatiya Janata Party (BJP) formed its government for the third consecutive term.
This will be Hasina’s second trip to the Indian capital in less than 15 days. She was among the dignitaries invited to Modi’s swearing-in ceremony on 9 June.
Though it is unlikely to see any breakthrough on Teesta water sharing deal specifically at this moment, the issue will come up for discussion in addition to a likely discussion on broader Teesta and relevant projects on development and management, a senior official told UNB on Tuesday.
Earlier on 9 May, India reportedly expressed interest to finance Bangladesh’s Teesta project which is known as “Teesta River Comprehensive Management and Restoration Project”.
“You know, we have taken a big project on Teesta. India wants to finance this project. It will have to be implemented in line with our needs. We want to see our needs fulfilled,” Foreign Minister Hasan Mahmud told reporters after his meeting with Indian Foreign Secretary Vinay Mohan Kwatra at the Ministry of Foreign Affairs on 9 May.
The renewal of the Ganges Water Sharing Treaty will also come up for discussion, officials said.
Earlier in 2022, the two leaders welcomed the formation of a Joint Technical Committee to conduct a study for optimum utilisation of water received by Bangladesh under the provisions of Ganges Water Sharing Treaty.
Foreign Secretary Masud Bin Momen recently said the two countries are scheduled to sign a number of MoUs and agreements and there is an issue of making some announcements on some areas of cooperation.
“There will be continuity of the relations, and we expect to see some new initiatives in our relations,” he told reporters on the sidelines of a reception recently.
Former State Minister for Foreign Affairs Md Shahriar Alam said they would take the Bangladesh-India relations to a new height in the next five years as there are new governments in place in the two neighbouring countries with continuity amid new mandate.
“There will be a stock-taking on what we left in September 2022 and we will take the relations to a new height in the next five years,” he said on Friday, noting that the expectations and aspirations are sky-high.
Recalling earlier discussions, Prime Minister Sheikh Hasina, during her state visit to India in September 2022, reiterated Bangladesh’s long pending request for concluding the interim agreement on the sharing of the waters of the Teesta River, the draft of which was finalised in 2011.
Referring to Land Boundary Agreement – LBA – and resolving maritime dispute with India, Shahriar said the countries would gradually be able to resolve the unresolved issues as complex issues had been resolved.
He said there was a 33-point joint statement issued during the state visit of prime minister of Bangladesh to India in September 2022 where issues like Comprehensive Economic Partnership Agreement (CEPA), energy cooperation, people to people contacts, broader connectivity and others were mentioned.
Shahriar said the upcoming visit of the prime minister will help advance the relations on those areas.
He hoped that the next meeting of the Joint Rivers Commission (JRC) will be held soon, noting that the 38th meeting of the JRC was held in New Delhi in August, 2022 wherein various matters pertaining to cooperation in water resources sector were discussed.
Joint Rivers Commission (JRC) has been functioning since 1972. It was established with a view to maintain liaison in order to ensure the most effective joint effort in maximising the benefits from common river systems. The JRC is headed by water resources ministers of both the countries.
Sources in the Foreign Ministry indicate that key issues on the agenda include cross-border connectivity initiatives, Indian investments in the Teesta special economic zone, management of Mongla port, and power trade.
Additionally, discussions on a potential trade pact are expected.
Over the past decade, numerous cross-border initiatives have been launched as part of a robust regional partnership plan.
The Modi-Hasina summit on 22 June might also focus on enhancing the defence partnership between the two nations.
This visit marks Sheikh Hasina’s third trip to New Delhi since September 2023, underscoring the strengthening ties between India and Bangladesh.
Bangladesh says India is a friendly country and Bangladesh does not compare the Dhaka-Delhi relations with anyone else. “India stood beside us during the War of Liberation in 1971. Our relationship with India is multifaceted. We share borders with India. We are supportive of each other,” Hasan Mahmud said.
PM’s engagements in New Delhi
A flight from Biman Bangladesh Airlines carrying PMHasina and her entourage will depart Hazrat Shahjalal International Airport on Friday at about 2pm, according to the sources in the Foreign Ministry.
The flight will land at Palam Airport, New Delhi at about 4pm (Delhi time) where high-level dignitary of India and Bangladesh High Commissioner to India Md Mustafizur Rahman will welcome her.
In the evening, Minister of External Affairs of India S Jaishankar will call on her at the Meeting Room of her Place of Residence, Hotel Taj Palace.
On Saturday morning, a red carpet will be rolled out at Rashtrapati Bhavan to receive Prime Minister Sheikh Hasina by her Indian counterpart through a ceremonial reception where the National Anthems of Bangladesh and India will be played. She will also inspect the Guard of Honour.
After that, she will go to Raj Ghat to pay tribute to the father of the Indian Nation Mahatma Gandhi by placing a wreath at his Samadhi. She will also sign the visitor’s book there.
Later on the same day, Sheikh Hasina will go to Hyderabad House to hold a tete-a-tete with Prime Minister Narendra Modi followed by delegation- level talks.
Both will witness the signing ceremony of the MoU and agreements.
After that, both the prime ministers will give their press statements. Then they will attend a Banquet Luncheon hosted by the Prime Minister of India in honour of the Prime Minister of Bangladesh at Hyderabad House.
In the afternoon, Hasina will call on the Vice President of India Jagdeep Dhankhar at his Secretariat.
In the evening Sheikh Hasina will call on the President of India Droupadi Murmu at Rashtrapati Bhavan.
At 6 pm (Delhi time), the prime minister will depart from Palam Airport, New Delhi by a flight of Biman Bangladesh Airlines and will land in Dhaka at about 9pm.
The International Monetary Fund (IMF) has urged Bangladesh to maintain a tight monetary policy to contain inflation, while stressing that monetary tightening alone will not be enough to restore economic stability.
Inflation in Bangladesh rose to 8 per cent in September, according to the IMF. The Washington-based lender has called for broader reforms in the financial sector, stronger revenue mobilisation and improvements in overall economic management to address the country’s persistent economic challenges.
Sonali Jain-Chandra, deputy director of the IMF’s Asia and Pacific Department, made the remarks in response to a question at a news conference on the economic outlook for Asia and the Pacific, held on the sidelines of the IMF and World Bank Group annual meetings in Bangkok, Thailand.
Asked whether tight monetary policy alone would be sufficient to tackle inflationary pressures that have persisted for more than three and a half years, Jain-Chandra said maintaining a restrictive monetary stance was important, but needed to be accompanied by other reforms.
Bangladesh is currently facing challenges in three key areas: revenue mobilisation, the financial sector and inflation, she said.
The IMF also expressed concern over the fragile state of Bangladesh’s financial sector, saying a credible reform strategy was needed to strengthen the sector’s capacity and ensure stability.
The fund also highlighted the country’s persistently weak revenue collection. Bangladesh’s tax-to-GDP ratio has declined over time and currently stands at around 7 per cent, placing it among the lowest in the world, according to the IMF.
The IMF stressed the need for a coordinated effort to increase revenue collection, saying higher government revenues were essential to finance development expenditure and strengthen the financial sector.
It called for necessary reforms to the revenue system and effective measures to improve the government’s capacity to generate income.
Talks Under Way on New IMF Programme
Meanwhile, discussions are continuing on a potential new lending programme for Bangladesh.
Jain-Chandra said Bangladeshi authorities approached the IMF in May for support under a new programme after deciding not to draw further instalments under the previous arrangement.
In response to the request, an IMF mission visited Dhaka in July to discuss various aspects of Bangladesh’s economic reform agenda.
According to Jain-Chandra, the reform issues discussed during the visit were closely aligned with the recommendations outlined in the IMF’s Article IV consultation for Bangladesh earlier this year.
The IMF has remained in regular contact with Bangladeshi authorities since the July visit, she said.
Jain-Chandra added that the fund remained closely engaged with the authorities and was ready to support Bangladesh in initiating the reforms needed to address its economic challenges.
The International Monetary Fund (IMF) has projected that Bangladesh’s gross domestic product (GDP) will grow by 3.2 per cent in the 2026-27 fiscal year, while average inflation could rise to 10.9 per cent, signalling mounting pressure on the country’s economy.
The projections were outlined in the IMF’s World Economic Outlook (WEO) report, released on Tuesday.
The latest growth forecast marks a significant downward revision from the 4.3 per cent projected by the IMF in April. The fund had subsequently forecast growth of 3.5 per cent in July before lowering its estimate further to 3.2 per cent.
The IMF has also sharply revised its inflation outlook for Bangladesh. In April, it projected average inflation of 6 per cent for the 2026-27 fiscal year. The latest estimate raises that figure to 10.9 per cent.
The combination of slower economic growth and persistently high inflation points to continued pressure on Bangladesh’s macroeconomic stability.
Bangladesh growth outlook trails other forecasts
The IMF’s latest growth projection for Bangladesh is lower than those of other major international development institutions.
The World Bank has forecast GDP growth of 3.4 per cent for Bangladesh in the 2026-27 fiscal year, while the Asian Development Bank (ADB) has projected growth of 4 per cent.
According to the IMF, Bangladesh’s economy grew by 3.6 per cent in the 2025-26 fiscal year, following growth of 3.5 per cent in the preceding fiscal year.
India, Bhutan expected to grow faster
The IMF has projected stronger economic growth in neighbouring countries, with India’s economy expected to expand by 7 per cent and Bhutan’s by 6.9 per cent in the relevant fiscal year.
The contrasting forecasts highlight the challenges facing Bangladesh as it seeks to restore economic momentum while tackling persistent inflation.
The IMF’s latest projections come as the annual meetings of the IMF and the World Bank Group are underway in Bangkok, Thailand.
Bangladesh’s economic situation, reform programmes and efforts to secure financing from development partners are among the key issues receiving attention during the meetings.
The World Bank supports the Bangladesh government’s policies to address the country’s current economic challenges, restore stability and implement medium- and long-term development plans, Finance Minister Amir Khasru Mahmud Chowdhury said on Tuesday.
He said the global lender was broadly aligned with Bangladesh’s economic programmes and policy priorities and would continue to support the country’s economic recovery and future development.
The finance minister made the remarks while speaking to journalists after a meeting with a World Bank managing director in Bangkok, Thailand, on October 13.
Amir Khasru said Bangladesh’s economy was facing significant challenges when the current government took office. Alongside dealing with the financial and economic burdens inherited from the previous period, the country was also having to navigate global economic disruptions caused by ongoing wars and geopolitical tensions.
He said the World Bank understood the realities facing Bangladesh and supported the government’s policy approach to overcoming the economic difficulties.
“The World Bank is aligned with the programmes and policy direction we have set to restore economic stability and ensure future development,” the minister said, adding that both sides would continue working together.
He said the World Bank was willing and prepared to provide the assistance Bangladesh needed.
No decision yet on proposed $10 billion in additional assistance
Clarifying reports that Bangladesh had sought an additional $10 billion in assistance from the World Bank, the finance minister said no final decision had been made.
He said discussions with the lender were ongoing and that possible proposals would be reviewed in light of those discussions. The process could take several months to complete, he added.
“No decision is being made at this stage. I have seen several inaccurate reports here and there. This is a discussion, and there will be follow-up based on these talks. It is a process that will continue over the next few months,” he said.
The minister stressed that the ongoing discussions should not be interpreted as a final agreement. Rather, they were intended to establish a basis for determining the next steps and considering possible decisions.
Further discussions would also take place in Dhaka, he said.
Expressing satisfaction with the progress of the talks, Amir Khasru said Bangladesh was in a favourable position to establish a framework for future cooperation.
He reiterated that the government’s economic policies, programmes and medium- and long-term development plans were broadly aligned with the World Bank’s position.
Government’s economic agenda aligned with BNP manifesto
The finance minister also said the World Bank’s position was consistent with the government’s economic plans and the Bangladesh Nationalist Party’s (BNP) election manifesto.
He said discussions were underway on how to address the country’s economic challenges and achieve the government’s development objectives.
According to the minister, the government has submitted a written proposal outlining a framework for partnership with the World Bank. Discussions on the proposed framework will continue.
He said the World Bank had provided various recommendations and suggestions, while Bangladesh had also presented its own proposals and recommendations.
Further discussions would be based on these submissions, he added.
Government optimistic about inflation and GDP targets
Asked about forecasts by the World Bank and the Asian Development Bank (ADB) on inflation and gross domestic product (GDP) growth, and how they compared with the government’s targets, the finance minister said the government did not intend to dispute the projections made by other institutions.
He said the institutions had prepared their forecasts based on their own calculations and analyses, adding that the country’s economic performance would become clearer as progress on key indicators was assessed over time.
“We do not want to dispute anyone’s projections. They have made their estimates based on their own calculations. We are carrying out our work, and they are doing theirs. What matters most is that the cooperation we need continues,” he said.
The minister expressed optimism that the government would be able to meet the inflation targets set out in the national budget.
He said the government was working to restore economic stability through continued engagement with the World Bank, implementation of its economic policies and progress on medium- and long-term development plans.
